Storm brewing in the East

 

Since 1978, China's economy has doubled every eight years. Today, the average Chinese person has some ten times the purchasing power they had just a quarter century ago. 

China was the engine room powering the Global boom of the early 21^st century, however there are signs now that the Dragon is catching its breath.  

China's economy has grown at its slowest pace in three years as investment slowed and demand fell in key markets such as the US and Europe.

Several indicators have begun to point to an economic downturn in the country, including  sharp slowdowns in electricity demand and industrial production as well as in factory output and retail sales.

During the last three years, Chinese investors have poured their money into the country's property construction boom.

For example, many firms financed the import of raw materials such as copper, iron ore and aluminium for the building industry.

It also provided a roundabout way for them to speculate on the strength of the yuan.

But it seems they went too far. The unused copper shipments piling up in China's warehouses have become so great that  the overflow is being stored in staff car parks and driveways.

Meanwhile the construction boom seems to have ground to a halt.

Total property sales dropped 12% in the first four months of the year, compared with a year ago. In response, the number of new construction projects fell 15% in April, while purchases of land fell by more than half.

China has already been suffering for several months from the chill wind blowing from Europe - its biggest export market, even bigger than the US.

China accounts for about a fifth of the world's total economic output and any slowdown may hamper a global recovery. 

At the same time, many of Asia's biggest and emerging economies are becoming increasingly reliant on China as a trading partner.